Centralising and optimising your software contracts

Picture the scene: you’re a Global organisation with offices in multiple countries and multiple sites within those countries. License management and procurement has been a local process, local currencies, local resellers, local agreements and local points of contact. You identify that you can no longer sustain a decentralised license management function and want to bring the control and governance of your licenses to a central function. You don’t take advantage of any quantity discounts or volume license agreements nor do you have a good negotiation position with the vendor.

Where do you start?

Gather as much documentation as you can

Understand your estate. What has been purchased? Where? When? By who? How many licenses are still in use or support? A big data gathering exercise is required here and can take months to complete. If you are lucky enough to have a SAM tool of some sorts, then you can request that local managers gather all of their license details and upload them to your SAM tool along with a scan of the document or a copy of the file. This is quite a mature way of doing things though and the likely hood is that you don’t have a SAM tool.

The other option is to create a central repository for local managers to put their software license documents in for the SAM team to analyse and action. A SharePoint site or a shared drive works well. Start a mini project and ‘license drive’ to encourage users to hand over their license and software documents to the SAM team. Remind the local teams that they are still a key stakeholder for SAM and license management and that you’re not actually taking anything away from them – you want to improve the management of their licenses and save them money.

Whilst this will take time, persistence and a bit of education, you’ll start to see all of your entitlement and software contracts. Remember, if local offices have been managing their licenses via a spreadsheet that you need the Proof of Entitlement & the spreadsheet isn’t enough.

What've you got?

This may be the first time you’ve been able to see all of your entitlement information, so there may be a few welcome (or unwelcome) surprises. Either way, this is where SAM earns its reputation for being the best business function around (biased, sorry!). Within your central repository, you need to start to analyse your entitlement information. You at have grouped the entitlement by location, which is great, but you need to start the analysis on a vendor by vendor basis.

Aim for the key vendors, your Tier 1. I suggest at this point you focus on spending as this is still an immature SAM function so there should be a lot of low hanging fruit. Use a trusty spreadsheet to start understanding your contracts, resellers, applications and costs.

You may quickly discover that you have far too many resellers for the same vendor and that you’ve always paid list price. Whilst this isn’t good for the organisation this is a fantastic opportunity for SAM to show its value. You may also find applications out of support, legacy licenses that were never upgraded or applications that pretty much do the same thing. Performing such analysis is once again not a quick process and will take time, especially if SAM is new in your organisation.

Requirements & Opportunity

Think about where you’d like this vendor to be from a SAM & license management point of view. One contract with all licenses and support ending at the same time, quantity discounts cleverly negotiated with the vendor, one reseller (where possible, geography permitting) and lots of added benefits such as support and training days and standardised versions and editions? Epic!

Does this fit in with your overall IT Strategy and user requirements? It’s time to network and get communicating! Speak to people about future business changes or projects that may require a large increase in licenses or Cloud services or even new applications that you may need to investigate. Once you know what you’ve got and what the nirvana state is for that particular vendor or contracts, it’s time to get negotiating.

Vendor negotiations

This is twofold really as you’re also moving from multiple resellers as well as a new Global contract. Firstly, I’ve found speaking to my peers has been useful as they have helped us identify their best partners for tech or software support or for organisations of your size or industry and also their experiences.

Get your procurement team involved to help with the tendering process. Once you have 3 or 4 resellers, I suggest engaging with them highlighting your requirements, quantities and any existing contracts you have with them. You need to ask them for a quote for the licenses, upgraded or co-terming that you have identified you need, along with any future services required. A lot of the time your decision will be based on the reseller that comes back with the lowest cost. If you’re happy with the reseller and the cheapest prices, then go ahead and track your savings or avoidance!

If you’re not happy with the vendor or worried about their capabilities, got the reseller that has impressed you the most or whom you think will add the most value to the agreement and your users. Once you’re ready, procurement, legal and senior management are happy, get signing your new, Global contract!

Informing the business of your changes

I have always been a fan of communicating SAM changes or activities with key stakeholders. New software contracts and single global reseller news would be a prime candidate for a communications campaign. This can be in the form of emails, webinars, blogs or even 1-1 calls with the stakeholders. Let them know exactly what the charges are, what it means for the business and what it means for them personally. Emphasise the benefits and why you’ve streamlined your resellers and implemented global contracts. Show off the year on year cost savings or added benefits.

Rinse & Repeat

You can use the same method mentioned above for other key vendors that you have identified as being decentralised or without a single contract in place. As you work through the vendors and understanding what you’ve got and what you need, you’re actually putting your SAM function in a position of power. You have valued data and a contract that works best for your organisation.

This is invaluable and another example of why SAM is such a powerful function. Keep doing the above & managing usage and requests and you’ll be well on the way to maturing your SAM function and having an optimal estate. What successes have you had in co-terming or centralising your contracts? Share your successes and any cost savings you’ve achieved in the comments and share experiences!

About the author:

David Foxen is a true Software Asset Management expert, having implemented a successful SAM structure in a number of organisations. He has also saved millions of pounds via internal audits and optimizing existing licenses. He has previously held a number of SAM roles including SAM Evangelist, ITAM Director, Global Software Asset Manager, Software Asset Manager and Software Asset Analyst.

Currently David is a Global Software Asset Manager for a world-wide, specialty chemicals and sustainable technologies company, responsible for implementing Software Asset Management from the ground up.

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